Correlation Between Kyndryl Holdings and Leidos Holdings

Can any of the company-specific risk be diversified away by investing in both Kyndryl Holdings and Leidos Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kyndryl Holdings and Leidos Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kyndryl Holdings and Leidos Holdings, you can compare the effects of market volatilities on Kyndryl Holdings and Leidos Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kyndryl Holdings with a short position of Leidos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyndryl Holdings and Leidos Holdings.

Diversification Opportunities for Kyndryl Holdings and Leidos Holdings

0.29

Correlation Coefficient

Kyndryl Holdings  Leidos Holdings

Modest diversification

The 3 months correlation between Kyndryl and Leidos is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and Leidos Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leidos Holdings and Kyndryl Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kyndryl Holdings are associated (or correlated) with Leidos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leidos Holdings has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and Leidos Holdings go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and Leidos Holdings

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to under-perform the Leidos Holdings. In addition to that, Kyndryl Holdings is 2.29 times more volatile than Leidos Holdings. It trades about -0.25 of its total potential returns per unit of risk. Leidos Holdings is currently generating about 0.0 per unit of volatility. If you would invest  13,042  in Leidos Holdings on January 29, 2024 and sell it today you would lose (6.00) from holding Leidos Holdings or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kyndryl Holdings  vs.  Leidos Holdings

Kyndryl Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kyndryl Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Leidos Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Leidos Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Leidos Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyndryl Holdings and Leidos Holdings

The main advantage of trading using opposite Kyndryl Holdings and Leidos Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyndryl Holdings position performs unexpectedly, Leidos Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Leidos Holdings will offset losses from the drop in Leidos Holdings' long position.

The idea behind Kyndryl Holdings and Leidos Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..